July 21, 2011

CBOT wheat gains as export demand may rise on dollar drop

CBOT wheat futures rose for a second straight day on speculation that demand will increase for US supplies as the dollar drops, while prospects diminish for crops in Europe.

The dollar fell for a second-straight day against a basket of six currencies, boosting the appeal of US grain exports. Crops in the EU, which produces a fifth of the world's wheat, have already been reduced by spring drought and now face harvest delays and declines in quality because of excess rains this month, according to French farm adviser Offre et Demand Agricole.

"If rains would continue to persist, that would be a bad thing" for global wheat supplies, Jason Britt, the president of brokerage Central States Commodities Inc. in Kansas City, Missouri, said. "The weaker dollar is something that is obviously a net positive" for US exports, he said.

Wheat futures for September delivery rose 3.5 cents, or 0.5%, to settle at US$6.97 a bushel on the Chicago Board of Trade.

Wheat is the fourth-largest US crop, valued at US$13 billion in 2010, behind corn, soy, and hay, government data showed.